By KIMBERLEY HAAS
The CEO of United Wholesale Mortgage has come under fire after posting online that he is “disappointed” with Rocket Mortgage’s decision to offer buyouts to members of its workforce.
Mat Ishbia posted on LinkedIn last week that this should not be necessary for a company that made over $5 billion in profits last year.
“These 2,000+ people will struggle to find new jobs, and I think it’s disgusting that they’re thinking short term and are solely focused on cutting a few million per month in costs… this is the wrong thing to do to people,” Ishbia said.
Ishbia went on to write that they have not had a single layoff in 35 years at UWM.
The post had 6,833 reactions, 536 comments, and 332 shares as of Monday morning.
Jared Fleisher is the Vice President of Government Affairs for Rock Central and he replied to Ishbia’s post by saying his comments about this move hurting families in Detroit is “empty cynicism.”
“There isn’t another company in Detroit or this country that can match Rocket’s record of philanthropy and community investment and service and overall commitment to its community. You sir have no such record to speak of. Rocket is responding to dramatically changed market conditions in the most thoughtful and caring way possible. The fact that you seek to exploit it for your own ends is evidence of nothing but the true depth of your cynicism, lack of caring, and immorality,” Fleisher said.
Rocket Mortgage has multiple community outreach programs, including the Rocket Mortgage Cause Campaign to combat homelessness.
Members of the Rocket Mortgage team support Operation Good Cheer. That is a Lansing, Michigan, based charity that collects Christmas gifts for more than 6,600 foster care children across the country.
The Rocket Mortgage Classic raises money to end the digital divide in Detroit, where the company is headquartered.
UWM is headquartered in Pontiac, Michigan, which is approximately 30 minutes away.
Ishbia has been blamed for layoffs at competing companies.
In a public statement on LinkedIn, Jason Vondrak of Prospect Home Finance recently announced he laid off 50 employees from his California-based company, and he laid the blame at the feet of UWM and Ishbia.
“This was one of the hardest decisions of my life, and my heart goes out to all of our team members and their families that this affected,” Vondrak wrote.
At issue is UWM’s decision last year to force brokers to sign an agreement that they will not work with Rocket Mortgage or Fairway Independent Mortgage – or else be banned from working with UWM, the largest wholesale mortgage lender.
Job cuts are hitting the mortgage industry after a huge addition of positions during the COVID pandemic.
Since the twilight of 2019, the number of those employed as brokers for mortgages and other types of loans spiked more than 50% to around 130,000.
Then, in August, mortgage rates began moving upwards.
In February, Bloomberg reported U.S. home mortgage lenders might have no other choice during the coming months than to initiate layoffs.
Green explained that as rates rise and refinance business dries up, production is being affected.
“Productivity equals closed loans per production employee per month. The higher the productivity ratio, the lower the cost to close. Since increasing production isn’t possible, lowering headcount is the only option,” Green said.
In the past two weeks, a number of announcements have been made about job cuts.
Digital mortgage company Better.com announced multiple rounds of layoffs, according to TechCrunch.
Blend Labs is cutting 10% of its workforce, according to MarketWatch.
Wells Fargo & Co. is laying off employees in home lending, according to the Charlotte Business Journal.
Green commiserates with those impacted by industry layoffs that he and others have pointed to.
“While it’s simple math, it’s painful for the industry and the people who work in it and are affected by it. The long-term solution is increasing overall industry productivity through an intense review of process and the underlying technologies on which those processes depend. It’s too late to solve for this round of coming layoffs, though not too early to be avoiding them in the future,” Green said.
Reporter Chuck Green contributed to this report.
See More Articles By Kimberley Haas:
Story ideas? Email Editor Kimberley Haas: [email protected]